Heterogeneity in the impact of drought on child human capital - evidence from Ethiopia

Poverty and inequality
Poverty and shocks
Human capital
Student paper

Children in the developing world are routinely exposed to drought shocks and other climatic hazards. Such shocks can have lasting effects in adulthood if they affect investments in child human capital. In this study, I investigate the impact of two recent episodes of drought in Ethiopia on two measures of cognitive outcomes: Peabody Picture Vocabulary Test (PPVT) scores and Mathematics Test scores. I use data from the Young Lives study on children followed at ages 8-10 and 12-14. Using both panel data and cross-sectional estimation techniques, I test for differences in drought impact by cognitive skill and by age. I also explore the channels of drought impact by estimating separate equations for the effect of drought on child anthropometry, enrolment and child’s time allocated to different activities. Finally, I test for heterogeneity in drought impacts by investigating variations in shock-coping mechanisms among different demographic groups.

The evidence suggests that drought affects cognitive skills differently – quantitative skills appear to be affected more adversely. However, these differences become less pronounced as children grow older. Broadly, cognitive skills are more likely to be affected adversely at adolescence than at the younger age of 8-10. Adjustments in time spent at school are a major channel affecting cognitive scores; however, evidence on the role of anthropometry and enrolment is much weaker. In terms of heterogeneity, for households specializing predominantly in agriculture, cognitive scores are less adversely affected during drought episodes. Cognitive outcomes are also disproportionately affected for male children, especially first-borns, who fare the worst. On the policy front, failing to take the vulnerability of specific demographic groups into account may translate to deepening poverty traps. Results also suggest that children’s aspirations have the potential to play a major role in buffering the impact of drought, however this needs further exploration.